Written by Kittenproperties
15.06.2023
The allure of Portugal's property market has skyrocketed over the last decade, and a key factor underpinning this trend is the country's Non-Habitual Residency (NHR) scheme. But what is the NHR scheme, and how does it attract property investors from across the globe? Let's dive in and find out!
Launched in 2009, Portugal's Non-Habitual Residency scheme offers significant tax advantages for new residents. It aims to attract high-value professions and pensioners to move to Portugal, but its benefits extend to property investors as well.
To be eligible for NHR status, you must not have been a Portuguese tax resident in the previous five years. You also need to stay in the country for more than 183 days per year or have a dwelling in Portugal that you intend to maintain and occupy as your habitual residence.
Under the NHR, most foreign-source income, including capital gains from real estate, is exempt from Portuguese personal income tax. This incentive is particularly attractive for investors looking for tax-efficient ways to manage their property portfolios.
Additionally, Portugal does not impose a wealth tax or inheritance/gift tax between immediate family members, thereby protecting property investments for future generations.
The Portuguese real estate market is renowned for its stability and sustained growth. According to a report from The Portugal News, property prices in Portugal increased by 15% in 2022.
Portugal offers a diverse range of property investment opportunities, from beachfront villas in the Algarve to apartments in historic Lisbon, appealing to a broad range of investor preferences.
The NHR scheme has significantly contributed to the rise in foreign property investment in Portugal. A 2021 report from the Global Property Guide indicated a surge of 17.3% in foreign investment in the Portuguese property market.
The influx of property investors has helped stimulate local economies, particularly in regions like the Algarve and Madeira. This impact has resulted in improved infrastructure and amenities, in turn making these areas even more attractive for further investment.
Known for its stunning beaches and golf resorts, the Algarve region has become a hotspot for property investors. The NHR scheme's incentives have enhanced the appeal of properties in the area, leading to significant growth in the local real estate market.
For many property investors, Portugal's NHR scheme pairs perfectly with the country's Golden Visa program. The Golden Visa offers residency to non-EU investors who invest a minimum amount into Portuguese property. Combining these two schemes allows investors to reap the benefits of both: property ownership and substantial tax savings.
Together, the NHR scheme and the Golden Visa have created a welcoming investment climate in Portugal, which has had a knock-on effect on the country's real estate market, contributing to increased property values and high rental yields.
The influx of property investors due to the NHR scheme and the Golden Visa has resulted in a surge of urban renewal projects, particularly in Lisbon and Porto. Old buildings are being renovated into luxury apartments, offering high-quality investment opportunities for foreign investors.
This urban regeneration not only improves the aesthetics of these cities but also revitalizes local communities, boosting the economy and improving quality of life, which further increases the attractiveness of these areas for property investment.
While the NHR scheme offers significant benefits, the application process can be complex. It is highly recommended that prospective investors seek professional tax and legal advice to ensure they fully understand the regulations and successfully navigate the application process.
Aside from understanding the NHR scheme itself, finding the right property to invest in is crucial. Collaborating with an experienced local real estate agent can offer invaluable insights into the local market and guide investors to suitable properties that align with their goals.
The Portuguese government is committed to maintaining the NHR scheme, recognizing its positive impact on the economy and the property market. Investors can likely look forward to more years of tax benefits.
The trend towards property investment in Portugal shows no signs of abating. As more people become aware of the tax benefits offered by the NHR scheme, coupled with the enticing real estate opportunities, Portugal is expected to remain a popular destination for property investors.
An anonymous investor moved to Portugal in 2015, drawn by the NHR scheme's tax benefits. He invested in a range of properties from residential apartments in Lisbon to holiday villas in the Algarve. Today, his portfolio's value has grown by an impressive 20%, demonstrating the lucrative potential of property investment under the NHR scheme.
In conclusion, Portugal's Non-Habitual Residency (NHR) scheme has proven to be a significant draw for property investors. By offering considerable tax advantages and facilitating a stable and diverse real estate market, the NHR scheme has transformed Portugal into a global property investment hub.In summary, Portugal's NHR scheme offers an impressive range of benefits to property investors, providing tax advantages, opportunities for capital growth, and even contributing to the country's urban regeneration. With expert advice and the right investment strategy, the NHR scheme represents an exciting opportunity for global property investors.
Individuals who have not been tax residents in Portugal in the last five years and plan to reside in Portugal for more than 183 days per year or maintain a dwelling as their habitual residence are eligible.
Most foreign-source income, including real estate capital gains, is exempt from personal income tax. Portugal also doesn't impose a wealth tax or inheritance/gift tax between immediate family members.
The scheme has significantly boosted foreign investment in the Portuguese property market, leading to growth and stimulation of local economies.
Regions like the Algarve and Lisbon are popular due to their diverse property options and the growth stimulated by the NHR scheme.
The NHR status is valid for a period of ten years from the year of registration as a Portuguese tax resident.
The NHR scheme pairs perfectly with the Golden Visa program, providing the dual benefits of property ownership and tax savings.
Yes, the influx of property investors has stimulated urban renewal projects in cities like Lisbon and Porto.
It's crucial to seek professional advice for the application process and to collaborate with an experienced local real estate agent to find the right property.
The Portuguese government remains committed to the NHR scheme, and Portugal's popularity as a property investment destination is expected to continue.
Yes, numerous success stories highlight the significant capital growth and tax savings achievable through property investment under the NHR scheme.
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